ASML: A Leading Semiconductor Production Equipment Manufacturer
ASML Holding NV ASML will be reporting its fourth-quarter earnings on Jan. 24. The company is expected to reveal $5.27 in EPS and $7.53 billion in revenues as it reports before market hours.
ASML is renowned as a semiconductor production equipment (SPE) manufacturer and is well-known for being a leading supplier of photolithography equipment used in the semiconductor industry. With a focus on producing advanced lithography machines, ASML plays a critical role in the production of integrated circuits (ICs) and other semiconductor devices.
Despite a modest 14.60% gain over the past year, ASML has significantly underperformed its SPE peers such as Applied Materials Inc, Lam Research Corporation, and KLA Corp, which have seen gains of 46.02%, 69.07%, and 45.64% respectively.
The ASML Analyst: Renowned analyst C.J. Muse from Cantor Fitzgerald has an Overweight rating on the stock with a price target of €900 (~$977.23) a share, presenting a 21% upside potential from the current trading price of €745 (~$808.93).
The ASML Thesis: Following a significant underperformance in 2023 due to a peak in orders and backlog followed by a substantial decline, ASML’s outlook for 2024 is expected to reverse, presenting an attractive “FIFO” (First In, First Out) opportunity, as noted by Muse.
Muse anticipates a rebound in ASML bookings by the second quarter of 2024 as a result of an expected increase in ASML bookings, supporting the growth projected for 2025. This growth is expected to be driven by an upturn in spending on DRAM, heightened demand from 3/2nm technologies featuring GAA/Backside Power, and stronger-than-expected High NA tool demand.
Muse believes that ASML is positioned to lead the SPE group in an upward trajectory considering the historical lows at which ASML shares are currently trading compared to its peers. Conversely, Muse sees relatively high multiples for CY24 and the expectation of modest growth in WFE (wafer fabrication equipment) in 2024 as potential challenges for the other SPE companies.
The optimistic outlook entails above-consensus estimates for ASML throughout 2024 with projected €30.00 in EPS in CY25, surpassing consensus estimates of €26.55. If these expectations materialize, ASML is positioned to be the top-performing System-on-Chip Equipment (SPE) name in 2024.
ASML Price Action: ASML stock was trading at around €707.10 at Euronext. Its ADR was trading at $778.39 at the NASDAQ, at market close Tuesday.
Courtesy: (c) ASML